Question

Kiev Corp. was incorporated on January 2, 2014, but was unable to begin manufacturing activities until July 1, 20I4, because new factory facilities were not completed until that date. The Land and Building account at December 31, 2014, was as follows:

The following additional information needs to be considered:
1. To acquire land and a building, the company paid $ 110,400 cash and 800 of its no par value, $8, cumulative preferred shares. The fair value of each share was estimated at $98 per share; however, Kiev's shares are not actively traded. The land and building were assessed by an independent, reliable valuator to have fair value of$166,000.
2. The costs for removing the building amounted to $9,800, and the demolition company kept all the building materials.
3. Legal fees covered the following:
Cost of organization ................. $610
Examination of title covering purchase of land ...... 1,300
Legal work in connection with construction contract ..... 1,860
$3,770
4. The insurance premium covered the building for a two-year term beginning May 1, 2014.
5. The special tax assessment covered street improvements that are permanent in nature.
6. General expenses covered the following for the period from January 2, 2014, to June 30,2014:
President's salary ....................... $32,100
Plant superintendent's wages covering supervision of new building .. 4,200
$36,300
7. Because of a general increase in construction costs after entering into the building contract, the board of directors increased the building's value by $43,800. It believed that such an increase was justified to reflect the current market at the time when the building was completed. Retained Earnings was credited for this amount.
8. The estimated life of the building structure is 50 years. The depreciation for 2014 on the building structure was 1% of the asset value (1% of $405,950, or $4,060). The estimated useful life of the building services (heating system, plumbing, air conditioning) is 20 years. No depreciation has been recorded on the building services.
Instructions
Prepare the entries to reallocate the proper balances into the Land, Buildings, and Accumulated Depreciation accounts at December 31, 2014.